Upload
apache05
View
217
Download
0
Embed Size (px)
Citation preview
8/7/2019 East and West Jan 8_Niall Ferguson
1/56
The West and the Rest:
Shifts in the Global Balance
of Economic Power
Skagen, January 2010
8/7/2019 East and West Jan 8_Niall Ferguson
2/56
8/7/2019 East and West Jan 8_Niall Ferguson
3/56
8/7/2019 East and West Jan 8_Niall Ferguson
4/56
8/7/2019 East and West Jan 8_Niall Ferguson
5/56
Source: Maddison, World Economy
8/7/2019 East and West Jan 8_Niall Ferguson
6/56
8/7/2019 East and West Jan 8_Niall Ferguson
7/56
But Asias industrial revolutions
70 yrs 26 yrs
8/7/2019 East and West Jan 8_Niall Ferguson
8/56
mean the shift from West to East
Source: IMF
8/7/2019 East and West Jan 8_Niall Ferguson
9/56
now looks unstoppable
Source: Goldman Sachs
8/7/2019 East and West Jan 8_Niall Ferguson
10/56
(Its happened before)
Source: Maddison
8/7/2019 East and West Jan 8_Niall Ferguson
11/56
Especially in manufacturing
Source: UN
8/7/2019 East and West Jan 8_Niall Ferguson
12/56
Source: World Bank
And the East is gaining fast
8/7/2019 East and West Jan 8_Niall Ferguson
13/56
Very fast
Source: Conference Board
8/7/2019 East and West Jan 8_Niall Ferguson
14/56
The demographics are clear
Source: United Nations
8/7/2019 East and West Jan 8_Niall Ferguson
15/56
And the Slight Depression
Source: Economagic
8/7/2019 East and West Jan 8_Niall Ferguson
16/56
has just speeded things up
Source: IMF
8/7/2019 East and West Jan 8_Niall Ferguson
17/56
We tried monetary stimulus (QE1)
Source: Federal Reserve
Fact: Fed lent $3.3trn in emergency
loans. Goldman Sachs turned to the
Fed for funding on 84 occasions, and
Morgan Stanley 212 times.
8/7/2019 East and West Jan 8_Niall Ferguson
18/56
And fiscal stimulus
Source: White House; CBO
8/7/2019 East and West Jan 8_Niall Ferguson
19/56
8/7/2019 East and West Jan 8_Niall Ferguson
20/56
Causing a developed world debt explosion
Source: IMF
8/7/2019 East and West Jan 8_Niall Ferguson
21/56
But now the hangover has begun
8/7/2019 East and West Jan 8_Niall Ferguson
22/56
Source: BIS
Debt/GDP projections
8/7/2019 East and West Jan 8_Niall Ferguson
23/56
Source: FT
8/7/2019 East and West Jan 8_Niall Ferguson
24/56
The death of the Eurozone?
Source: FT
8/7/2019 East and West Jan 8_Niall Ferguson
25/56
Source: BIS
Debt/GDP projections (2)
8/7/2019 East and West Jan 8_Niall Ferguson
26/56
PIGS
RUS
8/7/2019 East and West Jan 8_Niall Ferguson
27/56
Source: OECD
8/7/2019 East and West Jan 8_Niall Ferguson
28/56
PIGS R US
8/7/2019 East and West Jan 8_Niall Ferguson
29/56
PIGS R US
8/7/2019 East and West Jan 8_Niall Ferguson
30/56
Can the US set its house in order?
What the CBOrecommends tostabilize debt/GDP by2015
Cut 12.5% off all adultbenefits OR
Raise all taxes by 11%
If we wait until 2025 Cut 26% of all adult
benefits OR
Raise all taxes by 26.5%
8/7/2019 East and West Jan 8_Niall Ferguson
31/56
Can the US set its house in order?
What the CBOrecommends tostabilize debt/GDP by2015
Cut 12.5% off all adultbenefits OR
Raise all taxes by 11%
If we wait until 2025 Cut 26% of all adult
benefits OR
Raise all taxes by 26.5%
White House to extendBush tax cuts for all andintroduce a payroll taxholiday
Bill: $900bn for 2 years,of which $120bn fromhigh-end taxpayers
NB Bond market actionhas already pushed upmortgage rates by 57bps
8/7/2019 East and West Jan 8_Niall Ferguson
32/56
Now here comes the political fallout
Source: Economist
8/7/2019 East and West Jan 8_Niall Ferguson
33/56
The Chinese fear inflation
Because the United States issuance of dollars isout of control and international commodityprices are continuing to rise, China is beingattacked by imported inflation. The uncertainties
of this are causing firms big problems. Commerce Minister Chen Deming, October
U.S. engaged in uncontrolled and irresponsiblemoney printing: As long as the world exercises no
restraint in issuing global currencies such as thedollar then the occurrence of another crisis isinevitable. Xia Bin, PBOC adviser, November
8/7/2019 East and West Jan 8_Niall Ferguson
34/56
Not surprisingly
Source: IMF
8/7/2019 East and West Jan 8_Niall Ferguson
35/56
With gold at +$1,300
Source: FT
8/7/2019 East and West Jan 8_Niall Ferguson
36/56
Source: TIC Monthly Reports
Hence the quiet unwind
Down 10% since July
2009, from 13% to 10%
of total federal debt in
public hands
8/7/2019 East and West Jan 8_Niall Ferguson
37/56
But U.S. fears deflation
Source: Bridgewater
8/7/2019 East and West Jan 8_Niall Ferguson
38/56
from a monetarist contraction
http://www.shadowstats.com/charts/monetary-base-money-supply8/7/2019 East and West Jan 8_Niall Ferguson
39/56
Which leaves real rates positive
Source: Ambrosetti
8/7/2019 East and West Jan 8_Niall Ferguson
40/56
and runs the risk of a Greek tragedy
Source: CBO
8/7/2019 East and West Jan 8_Niall Ferguson
41/56
Source: Economist
Not to mention a 1-term Presidency
8/7/2019 East and West Jan 8_Niall Ferguson
42/56
And rapid strategic decline
Source: White House
8/7/2019 East and West Jan 8_Niall Ferguson
43/56
Hence the seductive appeal of QE2
8/7/2019 East and West Jan 8_Niall Ferguson
44/56
But that just leads to currency war, no?
If the Chinese dont takeactions [to endmanipulation of theircurrency], we have other
means of protecting U.S.interests. Obama at UNGen Assembly, Sept 23
Do not work to pressureus on the renminbi rate Many of our exportingcompanies would have to
close down, migrantworkers would have toreturn to their villages. IfChina saw social andeconomic turbulence,then it would be adisaster for the world. Wen Jiabao, Oct 6
NB Brazilian Finance Minister Guido
Mantega coined phrase currency war.
8/7/2019 East and West Jan 8_Niall Ferguson
45/56
8/7/2019 East and West Jan 8_Niall Ferguson
46/56
8/7/2019 East and West Jan 8_Niall Ferguson
47/56
8/7/2019 East and West Jan 8_Niall Ferguson
48/56
But who gains more from Chimerica?
Source: Bridgewater
NB China accounted for almost a fifth of world growth in 2010 IMF
8/7/2019 East and West Jan 8_Niall Ferguson
49/56
Chinas Plan: 1. Consume more
Chinese auto sales have gone from 2m per year in 2005 to14m, c/w U.S. 11m; Chinese demand for cars to rise 10-fold
China to use 20% of global energy by 2035 up 75% since2008 IEA
Source: Bridgewater
8/7/2019 East and West Jan 8_Niall Ferguson
50/56
2. Import more
China now biggest export market for Brazil(12.5% of exports in 2009), South Africa(10.3%), Japan (18.9%) and Australia (21.8%)
Economist China accounted for about 46% of global coal
consumption in 2009 World Coal Institute
In 2009 consumed twice as much crude steelas the European Union, America and Japancombined Economist
8/7/2019 East and West Jan 8_Niall Ferguson
51/56
3. Invest abroad more
January 2010: Chinese investors made directinvestment in 420 overseas enterprises in 75countries and regions: $2.4bn
Asia 44.7%; Africa 41.8% Communication & transportation 33.9%;
petrochemical 24%
Labor service personnel dispatched overseas in
January: 24,200 Total LSP overseas ~770,000
Source: China.CN http://en.china.cn/content/d732706,cd7c6d,1912_6577.html
8/7/2019 East and West Jan 8_Niall Ferguson
52/56
4. Innovate more
Source: WIPO
Still d t
8/7/2019 East and West Jan 8_Niall Ferguson
53/56
Educational attainment
of the population aged
25-34 years
2003
Source: OECD, Economic Survey of
the UK, October 2005
Still dont
believe me?
8/7/2019 East and West Jan 8_Niall Ferguson
54/56
You do the Math
Source: TIMSS
8/7/2019 East and West Jan 8_Niall Ferguson
55/56
and the Science
Source: TIMSS
8/7/2019 East and West Jan 8_Niall Ferguson
56/56
The Slight Depression is a symptom
of a bigger shift